Objectives and policy

The investment objective of the Income Fund is to preserve and to grow the real value of investors’ capital and income, with an emphasis on the generation of income.

The fund may invest in any geographical area and any economic sector. In accordance with the firm’s ethical principles, the fund has no investments in tobacco companies or companies directly involved in the development of arms.

Composition

The fund holds a portfolio of direct investments in a diversified range of international equities and fixed-interest securities. Asset and geographic allocations are continually evaluated and adjustments are made according to the relative merits of each asset class and the opportunities offered by different international markets.

Structure

The fund is structured as an authorised unit trust. Its structure provides investors with certain institutional safeguards and simplicity of administration. Furthermore, as no tax is suffered on capital gains realised within the fund, there are no tax constraints on active management of fund holdings and individuals benefit from the deferral of tax on capital gains (if any) until the point at which capital is withdrawn.

Note: Target portfolio allocations as at 30th June 2019. Actual allocations may vary. Commentary updated on 24th August 2018.

A complete listing of all stocks held by the fund at its most recent reporting date can be found here.

The state of the world economy remains reasonably positive for investment prospects. Generally GDP growth and corporate profits are holding up well. Interest rates look set to be raised at a measured pace as central banks unwind stimulatory policies. However stock valuations seem stretched in some markets, and political uncertainty in the USA, UK and Europe continues to disconcert investors.

The prospect of a global trade war is a major concern. President Trump's 'America First' policy is likely to prove very harmful to cross-border commerce. Higher US tariffs on selected imports have already triggered retaliation from other countries. Although only a few sectors have been involved to date, extensive damage to the international trading system cannot be ruled out.

Nevertheless, the US economy is in vigorous health, recording 4.1% growth in the second quarter. Unemployment has touched its lowest level since 1969. Against this background, the Federal Reserve is almost certain to raise interest rates further this year, although it has indicated that it expects that this will be a gradual process. At present, real wage growth remains restrained but recent tax cuts may put upwards pressure on bond yields and, by extension, interest rates overall.

There is still little clarity over the likely outcome or implications of Brexit negotiations. Deep divisions cut across the UK political spectrum on the issue. Meanwhile, there are increasingly shrill warnings from UK companies of the impact on business in an already lagging economy.

The eurozone is expected to grow a further 2% this year, despite a recent slowdown in new orders and a decline in business confidence. With underlying inflation still below 2%, the European Central Bank is set to move cautiously in unwinding its accommodative policy, particularly when the Italian government has pledged to defy the currency union's fiscal rules.

Despite short-term pressures from rising energy costs, India and China are growing much faster than Western economies. However developing markets are vulnerable to a strengthening of the US dollar and, of course, to any widespread imposition of tariff barriers. Elsewhere, political concerns are impacting Turkey and Latin American countries, and the resulting sharp currency movements and falls in asset values may prove contagious for other financial markets.

Portfolio allocations reflect a degree of caution and include a weighting in gold. Corporate results have been upbeat but valuations remain high, while bond yields are still at historically low levels. Political developments, particularly on the trade front, could easily upset market sentiment. At the same time, the prospect of further rises in interest rates is likely to add to uncertainty among investors.

Total return on investment
net of charges and assuming re-investment of dividends

Sources: McInroy & Wood and Office for National StatisticsNotes: Total Return on investment (net of charges) is shown in all graphs as the growth in an initial investment of £1,000 over the time period selected and in the tables as a percentage of UK sterling including the re-investment of income. Please note that the returns shown on this page are historic and should not be taken as a guide to or guarantee of likely future returns. Please be aware that the value of investments and the income they generate may go down as well as up.

Note: A Legacy Class Unit (SEDOL 0558509 & ISIN GB0005585095) existed until the legacy class was closed on 21st December 2016. The Legacy Class Unit was the only class of unit until 1st January 2013 when it was replaced as the principal unit class by the Personal Class Unit. The Personal Class Unit is the only class of unit now available.

Fees and charges

Personal class

Initial charge

Nil

Ongoing charges figure

1.12%

(including 1.00% annual management charge)

Exit charge

Nil

Performance fee

Nil

If you are considering investing in the fund or wish to manage existing investments all the information and forms you need can be downloaded using the links below. All investments require the completion of the appropriate form which should then be sent to the postal address below.

Our funds are also available from various platforms. These are categorised as either Retail (for anyone investing directly in their own right) or Advisor (for investments made via a professional intermediary).

Please do not hesitate to contact our Unit Trust Team should you have any questions.

If you require further information or clarification, or would simply like to discuss any aspect of the services we provide, please call us on the number below and we will make sure the right person speaks to you.